There have been many changes to superannuation recently but some things have remained the same, such as the multiple advantages of running your own super fund. More Australians are choosing to control their super and setting up SMSFs themselves but it’s prudent to seek specialist advice to make sure not only the fund is established correctly but you’ve considered all matters… good and bad.
One of the benefits of running your own super fund is it increases investment opportunities by consolidating super assets of up to four members to create a larger pool of funds.
SMSFs can also be flexible with more investment options such as shares, term deposits, high-yielding cash accounts, direct property, income investments, international markets, collectables, unlisted assets and more.
SMSFs also benefit from concessional tax rates.
Tax on income from investments is capped at 15% in the accumulation phase while there is no tax payable in the pension phase, including CGT. If tax strategies are carefully considered, trustees can grow their savings in super and lessen tax payments as they go into retirement.
SMSFs are also more flexible for multiple members to run a mix of accumulation and pension accounts.
They can manage their investment mix to be able to quickly respond to changes in super rules, market conditions and even personal situations. By using an SMSF with multiple members, administration costs may be reduced as well as the costs are generally shared amongst all. The trustees have to lodge an annual tax return and audit, pay ATO fees based on a fixed amount not on a percentage of funds balance. This can especially be more cost-effective as the SMSF grows.
Meanwhile, you can also decide where and how you will invest by completely tracking tax matters and performance. You can increase the size of your nest egg through leverage and enhance the valuation of properties in your fund via cosmetic improvements and maintenance using cash in your SMSF.
SMSFs can borrow to buy your business premises as well.
Remembering that an SMSF cannot purchase an asset from a related party nor member are permitted to use SMSF assets for personal use (i.e. live in a home owned by their SMSF). However, an exception exists where the SMSF can purchase a business real property from a member using borrowings and lease this asset back to the member at market rates.
For more information about superannuation and SMSFs in Australia, contact a Specialist to discuss your particular circumstances.
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